Steve Penny Speaking at AFI
Steve Penny speaking on HOW TO GET GRANTS TO MAKE FILMS & VIDEO at The American Film Institute

Film and video producers first becoming involved in grantsmanship frequently believe that if they are recipients of a non-repayable grant, that the funding agency must expect them to execute the project on a charitable basis, i.e., receive little or no compensation for their work.

This is a mistake! The people administering the grant programs are often receiving salaries for their work, and they expect you to as well. The eligibility requirements for the National Endowment for the Arts goes so far as to stipulate that only organizations that compensate its workers at the prevailing minimum compensation level are liable for funding.

The labor you put into your video project is valuable, and there are several ways of arranging your budget so as to be compensated for this work.

First, it’s important to understand certain terminology commonly used in philanthropy, for there are some important differences between writing a budget for a grant funded film of video compared to other types of financing.

 

Clouds PinkMatching Grants

Many federal agencies and some private foundations give what are called matching grants. Matching grants are funds which are usually awarded on a dollar-for-dollar matching basis.

In other words, at least one half of the total project budget must come from sources other than the granting agency. An example would be the National Endowment for the Arts (NEA) awarding a $10,000 matching grant for a video project that has a total production budget of $20,000. The grantee is expected to raise the remaining $10,000 through contributions from other, non-federal sources.

Contributions which are used to satisfy matching requirements fall into two categories – cash contributions and inking contributions. Cash contributions are where money changes hands. An example would be a private foundation awarding a video grant of $10,000 to match an NEA grant of $10,000 for a project with a total production budget of $20,000.

 

Clouds SunsetIn-kind Contributions

In-kind contributions on the other hand are where no money changes hands, but rather services or something of value that would ordinarily cost money is donated.

For example, if you own a video camera which ordinarily rents for $100 a day, and you donate the use of this camera to the project for ten days, this may be listed as an in-kind contribution of $1,000.

Your own salary, the salaries of people working on the video, or a percentage of these salaries may be donated as in-kind contributions. Anything of value contributed to a project, whether it be money, equipment, or services, may be used to help satisfy the matching requirements, and will be listed as either a cash contribution or an inking contribution.

 

Clouds SunsetIndirect Costs

Another term used in budgeting grant funded projects is indirect costs. Indirect costs are the expenses incurred in doing the administrative and accounting tasks in executing a project.

The figure is commonly arrived at as a percentage of the project’s total budget, generally five to thirty-five percent for media projects. Indirect cost rates are assigned to an organization with its first federal grant, and this rate is adhered to for all subsequent federal funding.

Indirect costs add to the total amount requested from the granting agency making it one consideration for a videographer seeking a sponsoring organization. For this reason, it sometimes makes sense to shop around for a sponsoring organization with a low indirect cost rate.

Keep in mind, however, that an organization with a relatively high indirect cost rate, such as a PBS Station, may have technical help and contacts that will be compensating factors.

The partnership which exists between the producer, or project director, and the sponsoring organization varies tremendously. It’s important to discuss and agree upon certain details of this relationship before you prepare your budget.

Get a clear idea of what the relative contributions of the project director and the sponsoring organization will be to the completed film. As project director, you will be responsible for the day to day execution of the project. This is work for which you should receive compensation in the form of a salary, proceeds from the distribution of the film, or both.

The sponsoring organization will be contributing its good name to the project. This can be a significant contribution, for it’s not unusual for a grant to be awarded on the basis of an organization’s name and reputation rather than on the merits of a specific project.

 

Clouds SunsetEstablish Copyright and How Revenues Will be Handled

Since the sponsoring organization is the grantee, it is responsible for the manner in which the award is spent, so most sponsoring organizations handle the work involved in accounting and disbursing funds.

Almost all foundation film and video grants are non-repayable. I.e., the granting organization does not seek reimbursement for the grant, so the revenue which is generated through distribution of the film or video is usually divided between the sponsoring organization and the project director.

Determine who will own the copyright of the finished film or video and how proceeds from the distribution will be split. Some foundations will stipulate the copyright be held by the sponsoring organization, but this point is usually negotiable.

It is not unusual for the project director to receive all of the proceeds from the distribution of the video, with the sponsoring organization being satisfied with the fees received through indirect costs, and the recognition that comes with good mention in the credits.

Other sponsoring organizations will ask for a percentage of the revenue generated by the project, and under certain circumstances will expect all of the proceeds from the finished piece. Factors which will influence this arrangement will be the policies and past activities of the sponsoring organization, the relative contributions of the project director and the sponsoring organization to the completed project, and the bargaining power of the project director. There is no standard percentage as to how these revenues are split, making it a matter that should be negotiated before the project is presented to a funding agency.

 

Clouds SunsetHow will Cash Flow Work?

Another point to discuss is how the cash flow will work. Since films and videos can often involve large expenditures, it should be determined how funds will be disbursed from the sponsoring organization for production expenses incurred by the project director.

How you arrange your own salary may vary with different funding sources. In most circumstances you should receive a producer’s fee if you are responsible for the execution of the project. This is especially true if you are working with an agency that has certain stipulations as to how the proceeds from the finished film are used.

Different funding sources like to receive their proposed project budgets in different forms. If you are applying to a federal agency you’ll generally receive an application form with categories and blank spaces to be completed. Private foundations are generally more free-form, asking simply that certain items be listed in your proposal.

Remember you must be prepared to justify any figures you list in your budget. Your figures will be reviewed by experienced film and videographers and an inability to budget realistically will tell the funding agency you may not have the organizational capability.

Some grant programs stipulate that money cannot be disbursed for costs incurred before the beginning of the grant period. However, a necessary ingredient of almost every media proposal is a script or treatment which can involve a large investment of time.

How can you be compensated for the work that goes into your video project before it is funded? One way is to copyright your script, then include in your budget a release for the script’s copyright. In this way you have incurred an expense after the beginning of the grant period for work that went into the film or video project before you received the grant.

Contact your prospective funding source to find out its policy regarding reimbursement for other costs involved in preparing the proposal, such as research and development or location scouting. All work contributed to the project preparing the proposal should be itemized and recorded on an hourly basis if you expect to be reimbursed for it.

Don’t forget to budget wear and tear on your car at the current rate allowable as a tax-deduction by the Internal Revenue Service. Other expenses frequently overlooked are sales tax and fringe benefits, such as insurance for people working on the production.

Remember that promotion and distribution of the finished film or video are expenses which should be covered by your grant since no media project is of any worth unless it reaches its intended audience.

Getting grants to make videos is not an instant process. At least a year usually elapses from the time you’re writing your budget before you are actually spending the money. Since inflation seems to be a continuing fact of life, include an inflation factor so your budget will still be realistic a year and a half from now.

Include a 15% contingency in your budget. A contingency is a “Fudge Factor” which covers unforeseeable expenses. Some foundations unfamiliar with film or video funding may challenge 15% as excessive. If this occurs, point out that the National Endowment for the Arts Media Program allows for a 15% contingency which is one of the largest federal funding sources.

Clouds SunsetIf any questions should arise as to what are allowable expenses, get on the telephone and discuss the matter with the foundation staff before submitting a final budget. It you are dealing with a private foundation it sometimes helps to contact the grants officer of a large federal agency life NEA and find out its policy on certain expenditures. Generally, what are acceptable accounting procedures for NEA will be acceptable for most private foundations.

A factor that will bear strongly on your success in receiving a matching grant from a federal agency is the likelihood of you acquiring matching contributions from private sources. Few film granting agencies like to feel as though they are footing the entire bill for a project. Ideally the NEA matching requirement demonstrates the support of the community in which the project will be executed.

NEA will award a matching grant and allow you to begin spending it before private matching contributions are received. The situation frequently arises where a proposal is approved by NEA for a matching grant, but the request for matching contributions from a private funding source will not be approved until several months later when the private foundation’s board meets.

Since you can never depend on money that is not in your hands, how can a video producer use the NEA award to begin work on a production without a firm commitment of matching contributions from a private source?

A farsighted filmmaker will take several steps to minimize risk in this situation. The basic rule of thumb is never spend more of the NEA grant than you are in a position to match.

Determine the maximum amount you can generate through in-kind contributions of services and equipment donations. Since films and videos are labor intensive, it’s not unusual for salaries to represent a substantial portion of a film’s total budget.

Budgets can change during the course of a production necessitating the transfer of funds from one budgetary category to another. For instance, you may need to take money originally designated for location expenses and use it to buy more film stock.

Contact the funding source to find out its policy on this type of transfer. NEA permits you to transfer up to 25% of the funds from one budget category to another before a revised budget must be submitted for approval.

Finally, in passing, in the rare circumstances that there is some compelling reason that you must receive funds immediately for a project, you should know that foundation presidents generally have $5,000 to $15,000 funds which may be released with their signature alone.

Keep in mind that philanthropy is administered by sophisticated people. Most financial transactions are conducted on the honor system, with follow through on the part of private foundations generally weak. Most funding sources would rather give away their money than spend it administrating the awards.

If any impropriety does occur in the use of grant funds, it is remarkable how quickly word of it spreads through the foundation world. There is no “blacklist” of organizations who have not completed projects or misspent funds, but foundation presidents do get together a great deal over lunch seeking advice and comparing notes. Not only will misuse of grant funds lessen the credibility of the motion picture community resulting in support being shifted to other fields, but it can effectively prevent a sponsoring organization from receiving any future grant funding.

 

Clouds SunsetConclusion

Grant funding for a motion picture project is attractive for many reasons. The selection process is one situation in life where your aspirations and qualifications are clearly documented and you are judged with an unusually high degree of impartiality. When you compare this with a lot of the weird personality trips one must often contend with to get started in Hollywood-type filmmaking many find grantsmanship far less compromising.

Winning grants to make films and video is not easy. It takes a serious commitment to a great deal of hard research and proposal writing. Professional grant writers, i.e., people who write grant proposals for a living figure they must fund one out of every five proposals to stay in business.

Getting grants to make films is a lot of hard work, but do you know very many easy ways to raise large sums of money to produce motion pictures? It’s one viable method of getting a start in the motion picture field or producing that video you’ve always dreamed of making.

In the long run your ability to learn from your mistakes and spring back with a refined technique will make you a master of grantsmanship!

 

This is Part 3 of a 3 part series on How to Get Grants to Make Films & Video

Click here for Part 1 on Researching Funding Sources
Click here for Part 2 on Applying to Foundations

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